STAY LONG WITH THE STOP LOSS OF 8780

The People’s Bank of China on Saturday cut the benchmark interest rate by 25 basis points to 5.35% and reduced the benchmark saving rate by a similar margin to 2.5%.

Data released on Sunday showed that China’s official manufacturing PMI inched up to 49.9 in February from January’s 49.8.

AT HOME

After plunging more than 2% from the top of the day immediately after the presentation of the budget, benchmark indices recouped all the losses in last two hours to end with gains of about half a percent. Sensex gained 41 points to settle at 29361 while Nifty finished at 8902, up 57 points. BSE mid-cap index however ende flat while the small-cap index lost half a percent.

BSE Bankex and Healthcare indices soared 3.3% and 2% respectively, becoming top gainers among the sectoral indices while FMCG index plunged 4.1%, becoming top loser, followed by 2% cut in Consumer Durable index.

Axis Bank and Indusind Bank soared 9% and 6.2% respectively after the budget clubbed the foreign direct investment (FDI) and foreign portfolio investment (FPI), so there will be more room for FIIs to buy further stake in these banks.

ITC plunged 8% after budget raised excise duty on cigarettes by 25% for cigarettes of length not exceeding 65 mm, and by 15% for cigarettes of other lengths.

The budget said the fiscal deficit target of 3% would be achieved in 3 years as against 2 years targeted earlier to focus more on growth.

Key highlights of the budget were GAAR deferment for two years and no retrospective applicability, exemption of minimum alternate tax (MAT) to capital gains earned by foreign portfolio investors (FPI), rationalization of corporate tax from 30% to 25% over next four years coupled with review of deductions, comprehensive bankruptcy code, abolishing wealth tax, merger of FMC with SEBI.

Other key announcement were Creation of National infrastructure fund, tax free bonds for infrastructure projects like road, rail and irrigation projects and plug and play for 5 UMPPS.

In the social sector, Direct Transfer of Benefits, (DBT), soil health card, prudent water management for irrigation, social security for poor (Atal Pension Yojana, accident related death benefit etc.), increase in deduction for health related costs, support for self employment activities in IT sector, support for SMEs managed by SC/ST, deduction of Rs. 50,000 from taxable income for NPS contribution, 100% tax deduction on contribution to Swatch Bharat initiative, etc are aimed at improved social security, promoting cleanliness and entrepreneurial activities for employment generation.

Oil marketing companies on Friday hiked petrol and diesel price by Rs 3.18 per litre and 3.09 per litre.

OUTLOOK

Today morning Asian markets are trading with gains in the vicinity of half a percent and SGX Nifty is suggesting about 35 points higher opening for our market.

Nifty on Friday ended 57 points higher at 8902, taking out previous closing high of 8895 made on 19th February and breaking out from the trendline resistance adjoining recent tops on the daily chart.

While 8997, the record high made on 30th January would be the immediate target to eye, there is possibility of Nifty climbing all the way to about 9200 in 1-2 weeks where the upward sloping trendline adjoining major tops on the weekly chart is placed.

Immediate support on the hourly chart is placed around 8780, with the stop loss of which trading longs should be held on to.